Canadians need to rely far more on personal savings if they want to retire comfortably, David Dodge, former governor of the Bank of Canada, said Thursday.

In a study done for the C.D. Howe Institute, Dodge said even those who think they have great company pension plans and solid RRSPs should re-examine their assumptions.

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David Dodge says even Canadians who think they have great company pension plans and solid RRSPs should rethink how much they should save.

He said that in order to maintain the same standard of living after they retire, Canadians need to set aside between 10 and 21 per cent of their pre-tax earnings every year, starting from the time they're 30.

"This fraction is likely far higher than many Canadians believe and higher than is set aside in most employer-based group RSPs or defined-contribution plans," Dodge writes in the paper, co-written with Alexandre Laurin and Colin Busby.

"It is also higher than the effective contribution over time of employer-sponsored defined benefit plans. And for high-income earners, [it] exceeds the annual limits placed on RRSP contributions."

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Retirement: Are you prepared?

"For middle and upper-middle income earners, the amount of saving they need to do … constitutes a much higher proportion of their earnings than people have been saving, or think they need to save, in order to produce a retirement income that is of a reasonable standard — 60 or 70 per cent —  of their final earnings," Dodge told CBC News.

Canadians over 30 who have not kept up with their savings, he said, will need to put aside far more than 20 per cent of their income for a smooth retirement or they will have to work well past 65.

Study a reality check

"Our findings provide Canadians with a reality check about the saving rates required to meet their retirement goals and inform the choices they could have to make between working longer or consuming less and saving more," Dodge said.

The study assumed Canadians would want to replace 70 per cent of their working incomes when they retire, and that they would retire at the age of 65.

Even under the scenario of a later retirement and only 60 per cent replacement of pre-retirement income, however, it found that savings needed to be substantial.

"That is a matter of choice. You may want to work a little longer," he said. "Or you may choose to have a non-standard income in retirement  — say 50 per cent of final earnings — in which case  the numbers look a lot more manageable."

Their research lends weight to those who say the country's pension system needs major reform, especially as large chunks of the population prepare for retirement.

Other research suggests that Canadian savings may not be as paltry as some policy makers and analysts fear. Once assets such as housing are taken into account, the net worth of the majority of Canadians is substantial enough to allow for a decent retirement, according to work led by University of Calgary economist Jack Mintz.

Ottawa is preparing to hold public consultations on pension reform this spring, in the hope of reaching some decisions in May in conjunction with the provinces.

With files from The Canadian Press